Commentary and analysis on markets, personal finance, and wealth building from a contrarian perspective. "I believe in the discipline of mastering the best that other people have ever figured out. I don’t believe in just sitting there and trying to dream it up all yourself. Nobody’s that smart."
— Charlie Munger

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Sunday, May 1, 2016

Russian stocks make new high

We
finish our week-long trip around the equity world today with the piece de
resistance, of sorts. Of all the country stock markets that we track in our
database, just one traded at an all-time high this week. We are betting that
not many folks out there would have guessed that that country is…Russia. Yet,
here was one of the “Russian Bear’s” main stock averages, the MICEX Index,
hitting a new all-time intraday high yesterday for the first time since 2007.

This really should not be a surprise for a couple of reasons. The oil price has bottomed and is now recovering sop this bodes well for the Russian economy and stock market. Quite a bit of Russia's economy is tied to oil and gas exploration. In addition the ruble has been strengthening against the US dollar as have most emerging market currencies. This is especially good news for US dollar investors in Russian equities as the strong ruble juices prices for dollar investors. I expect Russia to continue to do well especially as I anticipate a higher oil price by year end. You may recall that Russia was the cheapest market compared to its CAPE ratio. The lower the CAPE the higher the return over 5-10 year periods. In case you missed it I wrote about it here.